BIR Ruling [DA-129-04]

March 24, 2004 BIR RULING [DA-129-04] Alba Romeo & Co . 7/F Multinational Bancorporation Center 6805 Ayala Avenue Makati City Attention: Alba Romeo Gentlemen : This refers to your letter received by this Office on July 2, 2003, requesting for a confirmatory ruling that your client, MAGNUS PHILIPPINES, INC. be classified as WC 120 or as prime-contractor/sub-contractor pursuant to Section 108 (A) of the Tax Code of 1997 as implemented by Section 2.57.2 E (3)(m) of Revenue Regulations No. 6-2001, as amended. It is represented that your client MAGNUS Philippines, Inc. is a corporation duly organized and existing under and by virtue of Philippine laws with principal office at 32nd Floor Citibank Tower, Citibank Plaza, 8741 Paseo de Roxas, Makati City; that the company serves as a contractor providing computer-programming services; that it is hired by other companies to help develop their system and computer-programming requirements; that to support your stand you invoked Section 108 (A) of the Tax Code of 1997 as implemented by Section 2.57.2 E (3)(m) of Revenue Regulations No. 6-2001, as amended and BIR Ruling DA-070-02 dated April 18, 2002. In reply, please be informed that persons engaged in the sale of computer services, are subject to the 2% creditable withholding tax on income based on the gross amount received therefore, net of value-added tax (VAT), pursuant to Section 108(A) of the Tax Code of 1997 as implemented by Section 2.57.2 (E)(3)(m) of Revenue Regulations No. 6-2001, as amended (VAT Ruling No. 078-92 dated June 17, 1992). In view of the foregoing, this Office confirms your opinion that your client could be classified as WC-120 (prime contractors/sub-contractors) subject to the 2% creditable withholding tax on any derivable income payments. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group